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Consignment Procurement Process in SAP

In consignment process, the vendor provides materials and stores them on the enterprises premises.  The vendor remains the legal owner of the material until materials are withdrawn from the consignment stores for Production , Only then does the vendor require payment.  

Example: Car Manufacturing enterprise procure tire from the supplier but keep the stock in Production Plant. Enterprise is liable to vendor when the issue the tires for the production.

The invoice is due at set periods of time, for example,weekly, monthly.  In addition, it can also be arranged with the vendor that the ownership of the remaining consignment material is taken over after a certain period of time

 The consignment stock can be managed under the same number as the enterprise’s own stock. Consignment stock can, therefore, be transferred to the available stock.

1) It is possible to define consignment a price in foreign currency. The currency in which the order is placed with the vendor applies for consignment withdrawals.
2) It is possible to determine period-specific consignment prices.
3)  Using  consignment  info  records,  the  enterprise  can  make  use  of  other  condition functions used in Purchasing, such as discounts and price quantity scales.
4)  Consignment stocks of the same material from different vendors can be managed independently from one another and at the price of the individual vendors.
5) Consignment stocks are not valuated. When the material is withdrawn, it is valuated at the price of the respective vendor.
  
 A consignment material can be allocated to one of three stock types:
1) Unrestricted-use stock
2) Quality inspection stock
3) Blocked stock

It can be possible to make transfer postings between these three stock types.  Withdrawals can only be posted from unrestricted stock.

Pricing of Consignment Stock

Before a material can be ordered from a vendor or a goods receipt is posted to consignment stock, the consignment price must be maintained for the vendor in an info record.  The price is required for material valuation and accounting purposes.

If consignment material is ordered from several vendors, the system maintains the consignment stock separately for each vendor, since the individual quantities of the material can have different prices with each vendor.

Consignment material can  be  procured  via  purchase requisitions, purchase orders and  outline agreements for consignment material

Creating Purchase Requisitions for Consignment Material


The purchase requisitions are maintained for consignment materials in exactly the same way as for other materials.  The order category (such as NB) that the system proposes is then accepted as a default and the item category K (for consignment) is entered accordingly.

Creating Purchase orders for Consignment Material
The procedure for creating consignment orders is the same as for standard purchase orders or outline agreements. However, the following should be noted:
1)  Enter the item category K for the consignment item.  To ensure that the goods receipt is posted to the consignment stores and an invoice receipt cannot be generated for the item.
  



 



 





Posting Goods Receipt for Consignment Material
Goods receipts to your consignment stores can either be
1) With reference to a purchase order
2)  Created directly with ref to the vendor without a purchase order
 
The posting procedure is slightly different

A goods receipt to consignment stock is possible for three stock types:
Unrestricted-use stock
Quality inspection stock
Blocked stock

Goods Receipt With Purchase Order
If a purchase order created for the consignment material delivered, enter a goods receipt as follows:
T-code: MIGO
1) Enter PO Number and MOV type and other details
2)  Post the goods receipt.

 

Goods Receipt Without Purchase order
If the vendor's goods receipt is not based on a purchase order, proceed as below:
1) Choose Goods receipt other from the MIGO screen.
2) Choose Movement type Receipt W/o purchase order and enter the plant and storage location. Press ENTER to display the collective entry screen.
3)   Enter the number of the vendor.
4)   Enter the number and quantity of the consignment material.
5)  Post the goods receipt.

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